Finance giants fuel $8.9 trillion deforestation economy

Global Canopy’s Forest 500 report reveals that 150 of the world’s largest financial institutions invested nearly $9 trillion in deforestation-linked industries during 2024, with six out of ten firms lacking any public deforestation policies. The analysis tracked $8.9 trillion in direct and indirect financial support for 500 companies exposed to forest-risk commodities including palm oil, soy, beef, cocoa, and timber, with $864 billion going to businesses making no public commitments against deforestation. Financial titans Vanguard, BlackRock and JPMorgan Chase alone accounted for more than one-fifth of total funding at $1.6 trillion. The EU’s upcoming Deforestation Regulation #EUDR will ban imports of products linked to forest destruction from December 30, potentially locking out companies without robust policies. Urgent action needed to redirect finance away from forest destruction and toward Indigenous-led forest protection. Support a strong and strict EUDR to safeguard forests, be vegan and #BoycottPalmOil #Boycott4Wildlife

Sustainable Times. (2024). Global finance giants under fire for fueling an $8.9 trillion ‘deforestation economy’ in 2024. Sustainable Times. https://www.sustainabletimes.co.uk/post/global-finance-giants-under-fire-for-fueling-an-8-9-trillion-deforestation-economy-in-2024

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The world’s largest financial institutions Vanguard, BlackRock, and JPMorgan Chase are bankrolling a massive $8.9 trillion deforestation economy whilst offering minimal safeguards against forest destruction, according to explosive new research that exposes the banking sector’s complicity in global environmental destruction.

Global Canopy’s comprehensive Forest 500 report tracked investments from 150 of the planet’s biggest financial institutions throughout 2024, revealing systematic funding of industries driving tropical rainforest annihilation across palm oil, soy, beef and timber sectors. The scale of financial exposure proves staggering, with institutions providing $8.9 trillion in direct and indirect support for 500 companies engaged in forest-risk commodities.

The research exposed catastrophic policy failures across the financial sector. Six out of ten institutions reviewed maintain no publicly stated deforestation policies whatsoever, representing only marginal improvement from the previous year when two-thirds lacked such protections. Even more alarming, fewer than four in ten financial giants openly acknowledge that deforestation poses business risks to their portfolios.

Three financial behemoths dominate the destruction economy. Vanguard, BlackRock, and JPMorgan Chase “alone were responsible for more than one-fifth of the total” funding, collectively channelling $1.6 trillion toward forest-risk industries. Their enormous market influence means policy changes from these titans “could trigger rapid change across the global financial system,” according to Global Canopy analysts.

The geographic concentration of destruction finance reveals systematic patterns. Beyond the United States, “China and France also emerged as central hubs of financial flows into deforestation-linked industries.” This concentration demonstrates how relatively few financial centres drive global forest destruction through investment decisions.

Perhaps most damning, nearly $864 billion flowed directly to companies making zero public commitments against deforestation. This represents “almost one in every ten dollars” of total financing going to businesses with no safeguards protecting tropical forests from destruction for palm oil plantations, cattle ranches, or soy cultivation.

Global Canopy researchers emphasised the sector’s transformative potential, stating: “Unless financial institutions engage portfolio companies to act on deforestation risk – for instance, through strong stewardship of investee companies – their financing activities will undermine the positive impact of any transition finance they provide.” However, they noted these “financial heavyweights could use their investment strategies to drive better practice and transform commodity supply chains for the better.”

The European Union’s new Deforestation Regulation dramatically increases pressure on financial institutions to implement robust policies. Beginning December 30, the EU “will ban large businesses from importing beef, cocoa, coffee, palm oil, natural rubber, soy, or wood if these products are linked to deforestation.” The ban will eventually extend to smaller businesses, creating comprehensive market exclusions for forest-destructive products.

This regulatory shift creates urgent risks for financial institutions backing non-compliant companies. “Without robust policies, they will find themselves backing companies that are locked out of key markets,” the report warns. Financial institutions face the prospect of massive portfolio devaluations as their investee companies lose access to lucrative European markets.

A handful of progressive institutions demonstrate viable alternatives. Banco Bilbao Vizcaya Argentaria, Deutsche Bank, and Lloyds Banking Group represent “the only institutions shown to be screening and monitoring all the highest-risk commodities.” Their comprehensive approaches “provide a blueprint for others to follow” in developing effective deforestation policies.

Global Canopy outlined essential components for credible deforestation policies extending “well beyond a vague pledge.” Effective policies require “clear standards for screening clients and portfolio holdings, active engagement to bring non-compliant firms into line, and strict deadlines for divestment if companies fail to improve.” Additionally, institutions must maintain “transparent reporting of progress and commitments to human rights safeguards.”

The analysis examined nine critical forest-risk commodities: “beef, cocoa, coffee, leather, palm oil, pulp and paper, soy, rubber, and timber.” Each sector drives habitat destruction threatening wildlife populations whilst displacing Indigenous communities dependent on intact forests for survival.

The report concludes that financial institutions possess “immense influence over whether deforestation is curbed or allowed to spiral further out of control.” Current investment patterns tell “a troubling story, but with the right commitments, banks and investment firms could become powerful drivers of change” toward forest protection rather than destruction.

Sustainable Times. (2024). Global finance giants under fire for fueling an $8.9 trillion ‘deforestation economy’ in 2024. Sustainable Times. https://www.sustainabletimes.co.uk/post/global-finance-giants-under-fire-for-fueling-an-8-9-trillion-deforestation-economy-in-2024

ENDS

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